TORONTO, Nov. 11, 2015 /CNW/ - Brookfield Real Estate
Services Inc. (the Company) (TSX: BRE), a leading provider of
services to residential real estate brokers and their
REALTORS®1 today announced its
third quarter financial results (including its cash flow from
operations ("CFFO")), and the approval of a monthly dividend to
holders of the Company's restricted voting shares.
HIGHLIGHTS
- CFFO for the quarter increased by
12.3% to $8.5 million ($0.66 per Share), compared to the third quarter
of 2014.
- Year-to-date CFFO increased by 9.1% to $22.0 million ($1.72 per Share) compared to 2014.
- The Company acquired 12 Franchise Agreements in July, 2015
representing an annual royalty stream of $1.4 million.
- The Company's network of REALTORS® (the "Network") increased to
16,826, up from 15,377 at December 31,
2014.
- Canadian housing market transactional dollar volume and
national average house price continued to increase driven primarily
by strong markets in the greater Toronto and greater Vancouver areas.
- The Board of Directors of the Company approved a dividend to
shareholders of $0.1042 per
restricted voting share payable December 31,
2015.
THIRD QUARTER OPERATING RESULTS
CFFO for the third quarter of 2015 improved to $8.5 million or $0.66 per share on a diluted basis ("Share"), an
increase of 12.3% as compared to $7.5
million or $0.59 per Share in
the third quarter of 2014. For the nine months ended September 30, 2015, CFFO was $22.0 million or $1.72 per Share compared to $20.2 million or $1.57 per Share in 2014. CFFO for the
rolling 12 month period ended September 30,
2015 was $2.16 per Share as
compared to $2.04 per Share for the
rolling 12 months ended September 30,
2014.
Royalties for the three and nine months ended September 30, 2015 were $11.6 million and $30.3
million, respectively, compared to $10.8 million and $28.8
million, respectively, for the same periods in 2014. Net
earnings for the three months ended September 30, 2015 were $7.8 million, or $0.31 per Share as compared to $2.2 million, or $0.23 per share in 2014. For the nine months
ended September 30, 2015, the Company
generated net earnings of $4.3
million, or $0.46 per Share as
compared to $1.4 million, or
$0.15 per Share in 2014.
The increased royalties and improvement in CFFO were driven
primarily by an increase in the number of REALTORS® in
the Network. CFFO also benefited from lower cash operating expenses
as compared to the third quarter of 2014 due to reduced interest
costs and lower bad debt expenses.
"We are very pleased with our financial and operational success
this quarter, as we continue to build on the strong results
achieved year-to-date," said Phil
Soper, President and Chief Executive Officer of Brookfield
Real Estate Services Inc. "Our royalties and cash flow from
operations were both up year-over-year as we continue to increase
the number of agents in our network."
"With the successful acquisition of 12 new real estate brokerage
franchise agreements in July, our growth objectives remain on
track," added Soper. "We are particularly excited to have the
largest independent brokerage firm on Vancouver Island, Coast
Capital Realty Group join our Royal LePage family. The
acquisition continues our strategy to materially increase our
market share in British
Columbia."
THE COMPANY NETWORK
As at September 30, 2015, the Network
was comprised of 16,826 REALTORS®, operating under 322
franchise agreements (together with any addendums, "Franchise
Agreements") providing services from 670 locations, with
approximately one fifth share of the Canadian residential real
estate market ("Canadian Market") based on 2014 transactional
dollar volume. On July 1, 2015,
The Company purchased 12 Franchise Agreements representing an
annual revenue stream of approximately $1.4
million from 719 REALTORS®. On a
year-to-date basis, the Company has purchased 52 Franchise
Agreements representing an annual revenue stream of approximately
$2.9 million from 1,577
REALTORS®. This increase was partly offset
by net attrition of 128 agents for the nine months ended
September 30, 2015. During the nine
months ended September 30, 2014, the
Company added 493 REALTORS® through the acquisition of
Franchise Agreements which was partly offset by net attrition of
210 REALTORS®.
REAL ESTATE MARKETS
According to the Canadian Real Estate Association
("CREA")2, for the rolling 12 month period ended
September 30, 2015, the Canadian
Market, as defined by total transactional dollar volume, closed up
13.3%, at $217.5 billion, compared to
the same period in 2014, driven by an increase of 7.7% in national
average selling price and a 5.1% increase in units sold. For the
three month period ended September 30,
2015, the Canadian Market was up 10.9%, at $58.7 billion, over the same period in 2014,
driven by a 7.6% increase in national average selling price and a
3.1% increase in units sold.
The most marked increases were in the Greater Toronto Area and in Greater Vancouver, according to the Toronto
Real Estate Board ("TREB")3 and CREA. On a rolling
twelve-month basis, the housing market in the Greater Toronto Area ("GTA") experienced a
year-over-year transactional dollar volume increase of 19.3% driven
by a 9.8% increase in average selling price, and an 8.7% increase
in number of units sold. For the three months ended
September 30, 2015, the GTA market
experienced a 15.5% transactional dollar volume increase based on a
10.1% increase in average selling price and a 4.9% increase in
number of units sold over the same period in 2014. The Greater Vancouver market experienced
larger increases with transactional dollar volumes increasing
by 34.4% on a rolling twelve month basis and 31.4% for the quarter
over 2014.
OUTLOOK
"Economic slowdowns in energy-dependent
markets, particularly in western Canada, have in part been offset by both
renewed industrial activity in other parts of the country and the
Bank of Canada's recent interest
rate cuts. As a result, the Canadian housing market remained
healthy, with home prices showing moderate to strong year-over-year
growth in most markets in the country," said Soper. "As
witnessed so far this year, strong national home price increases
are largely being driven by continued double-digit percentage
increases in the Greater Toronto
Area and Greater Vancouver. We expect price
appreciation in these two regions to remain strong for the balance
of 2015, while markets in the rest of the country maintain more
modest levels, in many cases below the long-term average."
CASH DIVIDEND
The Company declared a cash dividend of $0.1042 per restricted voting share payable on
December 31, 2015, to shareholders of
record on November 30, 2015.
This represents a targeted annual dividend of $1.25 per restricted voting share.
CONFERENCE CALL
Brookfield Real Estate Services Inc. will host a conference call on
Wednesday, November 11, 2015 at
10 a.m. ET to discuss its financial
results for the third quarter of 2015.
To access the call by telephone, please dial (888) 231-8191 or
(647) 427-7450. Please connect approximately ten minutes prior to
the beginning of the call to ensure participation. A
recording of the conference call will be available in the Investor
Centre on the Company's website by Thursday
November 12, 2015.
REGULATORY FILINGS
The Company expects to file its
interim report to shareholders (including its financial statements
and management's discussion and analysis ("MD&A")) for the
third quarter ended September 30,
2015 on SEDAR on or about November
13, 2015. The MD&A is expected to include certain
disclosures related to Canadian Securities Administrators
Multilateral Staff Notice 58-307 regarding Compliance with National
Instrument 58-101 Disclosure of Corporate Governance
Practices.
CFFO
This news release and accompanying financial statements make
reference to CFFO on a total and per Share basis. CFFO is defined
as operating income prior to deducting impairment and amortization
of intangible assets. CFFO is used by the Company to measure the
amount of cash generated from operations which is available to the
Company's shareholders on a diluted basis where such dilution
represents the total number of Shares of the Company that would be
outstanding if Exchangeable Unitholders converted Class B LP units
into Shares of the Company. The Company uses CFFO to assess its
operating results and the value of its business and believes that
many of its shareholders and analysts also find this measure
useful. CFFO does not have any standard meaning prescribed by IFRS
and therefore may not be comparable to similar measures presented
by other companies.
FORWARD LOOKING STATEMENTS.
This news release
contains forward-looking information and other "forward-looking
statements". Words such as "outlook", "believe", "continues",
"grow", "will", "remain", "expects" and other expressions that are
predictions of or could indicate future events and trends and that
do not relate to historical matters identify forward-looking
statements. Reliance should not be placed on forward-looking
statements because they involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of the Corporation to differ
materially from anticipated future results, performance or
achievement expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ
materially from those indicated in the forward looking statements
include: a change in general economic conditions (including
interest rates, consumer confidence and other general economic
factors or indicators), changes in the Company's corporate
strategy, the level of residential real estate resale transactions,
the availability of attractive investment opportunities, the
average rate of commissions charged, competition from other real
estate brokers or from discount and/or Internet-based real estate
alternatives, the closing of existing real estate brokerage
offices, other developments in the residential real estate
brokerage industry or the Corporation that reduce the number of
REALTORS® in the Company's Network or royalty revenue
from the Company's Network, our ability to maintain brand
equity through the use of trademarks, the methods used by
shareholders or analysts to evaluate the value of the Company and
its publicly traded securities, the availability of equity and debt
financing, a change in tax law or regulations, and other risks
detailed in the Company's annual information form, which is filed
with securities commissions and posted on SEDAR
at www.sedar.com. The Corporation undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law.
ABOUT BROOKFIELD REAL ESTATE
SERVICES
Brookfield Real Estate Services Inc. is a
leading provider of services to residential real estate brokers and
a network of more than 16,000 REALTORS®. We operate in
Canada under the Royal LePage, Via
Capitale and Johnston & Daniel brands. Further information
is available at www.brookfieldresinc.com
Brookfield Real Estate Services Inc. is an affiliate of
Brookfield Asset Management, a leading global alternative asset
manager with over $200 billion of
assets under management. For more information, go
to www.brookfield.com
1 REALTORS® is a trademark
identifying real estate licensees in Canada who are members of the Canadian Real
Estate Association.
2 Source: National MLS® Report: The Canadian Real
Estate Association News Release as of October 15, 2015, July 15,
2015, October 15, 2014 and
July 15, 2014.
3 Source: Toronto Real Estate Board Market Watch as
of September 2015, July 2015, September
2014, and July 2014.
SOURCE Brookfield Real Estate Services Inc.